Interviewing a Real Estate Agent / Broker / Salesperson & Negotiating the Listing Agreement
Real Estate Attorney NYC
Interviewing a Real Estate Agent/Broker/Salesperson (“Real Estate Broker”)
When going through the process of interviewing a Real Estate Broker, it is vital to ask a Real Estate Agent/Broker many the following questions:
- How many listings he or she may have? This question is asked in order to get a clear sense of if the Real Estate Broker has the means to service more clients.
- What markets the Real Estate Broker is familiar with?
- How many years of experience does the Real Estate Broker have?
- Does the Real Estate Broker have any other similar listings?Inquiring if the Real Estate Broker has any other similar listings could be highly beneficial. If the Real Estate Broker has similar listings then the Real Estate Broker may have an easier time attracting potential Purchasers.
- Does he or she have a marketing plan?
You should ask the Real Estate Agent/Broker to explain (or provide in writing) in detail the marketing plan for the listed Apartment/Unit.
Negotiating the Brokerage-Listing Agreement
Upon hiring a Real Estate Broker a Cooperative Seller will be asked to sign a brokerage/listing Contract. There are many types and forms of relationships that may be created when retaining a real estate broker. It is important to fully understand the rights and obligations of between the respective parties to a brokerage agreement. Unfortunately, due to either improperly drafted brokerage agreements in which the parties did not fully understand the respective of rights there is much litigation that surrounds of this subject matter. The fact is, that if a properly drafted brokerage commission is formed where both parties fully understand all of their obligations and what is required of them, litigation should always be avoided. Hence, it is mandatory to have experienced legal counsel represent you in the negotiation of a properly drafted brokerage – listing agreement.
A brokerage – listing agreement will have, among many other things, the following components:
- The Contract will address the beginning and termination date of the Listing Agreement. Normally, Real Estate Brokers wants a listing duration of six (6) months to secure the sale. In some cases the Cooperative Apartment/Unit is unique in some way and will be purchased rapidly. In a good market, an Apartment/Unit can be sold well ahead before the six (6) month period. For instance, in the second half of 2014, on average to sell a New York City Apartment/Unit took about approximately three (3) months.
- The listing price at which the property will be offered for sale.
- The commission of the Real Estate Broker. There is no “standard” commission because commissions are legally negotiable. In Manhattan below 96 Street on the east side and 110th St. on the west side, Brooklyn (certain areas), Queens (certain areas) Bronx (certain areas) anything less than 5% is rare. However, the discussion of a real estate brokerage commission should be had with your attorney. Experienced real estate attorneys may provide to you great insight on how best to structure a commission.
- The terms and conditions under which the Seller shall pay the brokerage fee.
- An authorization of the cooperation of the Seller’s Real Estate Broker with other Real Estate Brokers as sub-agents.
- A Cooperative Seller generally signs an “Exclusive Right to Sell” Agreement. This Agreement guarantees the Real Estate Broker the commission that was agreed upon regardless of who tracks down the Purchaser, unless exceptions had been negotiated beforehand. It is also possible that there will be a “Co-Exclusive” agreement among two (2) Real Estate Broker or an “open listing”. However, there were other types of listings besides the “exclusive right to sell” and all options should always be explored and fully understood. This is why it is imperative, prior to signing off on any agreement, that you should have your real estate attorney on board and ready to proceed.
- termination clauses as to what rights either party has two terminate the real estate brokerage agreement. Unfortunately, not every matter works out so smoothly and the relationship may go sour. It is important to visualize what happens in such an event.
- Post agreement purchasers. It is not unusual that after the term of the brokerage agreement, if the unit is not sold, a purchaser who initially viewed the property during the term of the agreement comes back in places and another offer to purchase. What happens in such a scenario.
- out-of-pocket expenses.